Environmental and Natural Resource Economics 3rd ed. Jonathan M Environmental and Natural Resource Economics 3rd ed. Jonathan M. Harris and Brian Roach Chapter 2 – Resources, Environment, and Economic Development Copyright © 2013 Jonathan M. Harris

Figure 2.1: Feedback Loops of Population, Capital, Resources, Agriculture, and Pollution Deaths/year Food Population (total number of people) Food/person Cultivated Land Pollution Births/year Fertility Agricultural Inputs Desired Food/person Industrial Output Nonrenewable Resources Efficiency of Capital Investment (new capital added/year) Investment Rate Average Lifetime of Capital Depreciation (capital becoming obsolete or worn out/year) (+) (-) Mortality (life expectancy) Industrial Capital (factories and machines) The Limits to Growth model is based on a complex pattern of feedback loops, incorporating population, resources, environment, and human-made capital. Source: Meadows et al., 1992.

Figure 2.2: The Basic Limits to Growth Model The basic, and most famous, run of the Limits to Growth model showed a pattern of overshoot and collapse, with population and economic growth outrunning the capacity of the planet’s agricultural, resource, and environmental systems, causing a rapid reversal of growth in the early to mid-twenty-first century. Source: Meadows et al., 1992.

Figure 2.3: A Sustainable World Model The less well-known “sustainable world” model shows an adaptation to resource and environmental limits, with improved technology and resource recycling reducing pollution. Note, however, that while there is no collapse of economic production in this version, the exponential growth characteristic of the twentieth century comes to an end by the mid-twenty-first century. Source: Meadows et al., 1992.

Figure 2.4: Growth in Population, Agricultural Production, and Energy Use 1961-2010 Current trends show continual growth in population, agricultural production, energy use, and gross world product. Population growth has slowed, and energy use has become more efficient, as shown by the energy trend line falling below that of gross world product starting in the 1980s. Sources: Population and agriculture: FAO , 2012;, ; GWP: IMF, www.imf.org; energy data: US EIA, www.eia.gov.